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We're setting our world up for more crises, in health and other fields. We may well find that this is just prologue. What can Australia do to make itself stronger in the face of what's to come?
Our reliance on supplies and services from overseas has proved problematic. What should Australia be able to do within our borders, even if it's cheaper to have done overseas? What should we be able to do in cooperation with near neighbours, even if its cheaper to have done further afield?
Within the current globalised regime, Australia is poorly managed. Why haven't we, for example, invested in the level of fuel reserves recommended by the International Energy Agency?
Under those International Energy Agency (IEA) obligations, Australia, like many other countries, is expected to hold 90 days of net fuel imports in reserve.
In its most recent assessment at the end of last year, the Department of Environment and Energy put the actual level at 53 days.
Where else might greater investment in buffer stocks and capabilities have served the nation well?
The epidemic has disrupted markets nation wide. Government policy has had some influence:
Operations will continue in Queensland because services are underwritten by the State Government.
Even more radical interventions have been mooted:
Nationalisation talk also continues to swirl around Australia’s two airlines, national carrier Qantas and challenger Virgin Australia.
Perhaps the most egregious market failure is the waste of human capital evident in the underemployment rate. Coronavirus has not helped. A nation's most valuable assets are its people. Before this crisis, Australia was not doing well (political spin notwithstanding). As market mechanisms fail, what are our options? What can we do to make our society and economy more robust when we face the next shock?
One market failure can be seen in the closure of Australian Associated Press (AAP). AAP chairman Campbell Reid offered a solution:
“If someone wanted to make an offer, there is nothing stopping them.”
A free society depends on freedom of information. The people need accurate, trustworthy and timely news. Public sector media come under repeated political attack, but they're still the best we have. If the private sector can't sustain AAP, then perhaps it should join the public sector. An agency providing text and images for media outlets would fit in well with the ABC and SBS. Of course, any expansion of public media will need to have adequate funding, protected from political interference. The agency/commission (history shows that corporate structures really don't work very well) would need legislated protections from predatory politicians.
In The Australia Institute's Response to Second Stimulus Package, Senior Economist Matt Grudnoff observed:
... this is a structural problem. And if we don't act now and recognize that structural problem, then we're not going to solve it. ... This is an opportunity for the government to employ people directly. This is an opportunity for the government to commission projects that employ people. At the moment, all the government is trying to do is to stop business from laying off workers—and that's a very good thing to do—but in tandem to that, the government needs to also employ people and commission things to employ people. The added advantage of this is that when this crisis is over, we can have sustainable infrastructure. We can have things that have benefits for decades to come. If the government doesn't do this, all we will end up with is having handed out money and there'll be no long-term benefits.
The following day, Giles Parkinson commented in Renew Economy:
Have you ever swum in any of those tidal pools along the Sydney shoreline? Turns out many of them were built at the time of the Great Depression. Some 90 years later, these are assets that are still being used by many Australians. It’s time to think what else could we build or do now which will have benefits down the line.
More direct government involvement in economic activity should see more done that the nation needs done, make better use of our human resources and mitigate the impacts of market failure (depression, mental illness, suicide, etc).
One obvious mechanism would be for government to act as labour hire provider. Business would be able to source the skills they need, as needed, and people who want it would be guaranteed work, training and income. This combines elements of a jobs guarantee and Universal Basic Income. When not working for the private sector, workers could be employed on necessary projects, such as community services and the infrastructure that Australia so sorely needs. Isn't that a better use for public monies than forcing people to apply for non-existent jobs?
From observation, the more extreme the Capitalism, the weaker the economy and society. Nations like China, South Korea and Singapore, where the economy is more controlled, have fared better.
It has been said that Capitalism doesn't do economics very well. The tendency to suppress wages and concentrate wealth, so fewer people can afford to participate in retail markets, is a case in point.
Adam Smith recognised that Capitalism probably had a best-before date:
one should bear in mind that, if growth is the great theme of The Wealth of Nations, it is not unending growth. Here and there in the treatise are glimpses of a secularly declining rate of profit; and Smith mentions as well the prospect that when the system eventually accumulates its “full complement of riches” … economic decline would begin, ending in an impoverished stagnation.
It seems likely that the best-before date of Capitalism is long past, but parts of Capitalism might still be useful.
Business and politicians are prone to taking advantage of crises, such as the COVID-19 epidemic. Already, Victoria has been opened to gas exploration, Sydney's water supply is to be undermined and South Africa has rushed to build a border wall. In the US, the Environmental Protection Agency has used the epidemic to rationalise a sweeping relaxation of environmental rules. Civil liberties temporarily suspended to fight the outbreak won't necessarily return to normal.
Naomi Klein called it Disaster
Capitalism and some say that Capitalism
is the disaster. Whatever it is, we need to guard against those who
would profit by making the situation worse for the rest of us.
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